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The American's Creed

I believe in the United States of America as a government of the people, by the people, for the people; whose just powers are derived from the consent of the governed; a democracy in a republic; a sovereign nation of many sovereign states; a perfect union, one and inseparable; established upon those principles of freedom, equality, justice, and humanity for which American patriots sacrificed their lives and fortunes.

I therefore believe it is my duty to my country to love it; to support its constitution; to obey its laws; to respect its flag; and to defend it against all enemies.

The bigger the house, the more you’re going to spend in mortgage payments, upkeep, taxes, and everything else. So, although the equity in the home will help your net worth grow, the money spent keeping it up will take away from your net worth. With all the dumb mistakes my wife and I have made, we made awesome choice when we bought our house. We bought what we could afford but were able to find a house in a great neighborhood. Our house is now worth about 60% more than we paid for it nearly eight years ago.

A lot can be said for practicing self-discipline in your spending. A lot of times we want things only because they are new or popular, which means we’re going to pay more for them. I remember people paying $10,000 more than sticker price for the Mazda Miata when it first came out. Now look at how many of them you see out on the roads. If we can force ourselves to put off buying these things, the newness will wear off and the price will decrease and we can buy them for a lot less (or we will have moved on to something else).

5 Responses to “7 Net Worth Killers (From CNNMoney)”

For example, if you can afford to live in a new place if you just cut back on eating out a little… then you probably can’t afford to live there. The rotating 0% credit card balance transfer only works if you really are disciplined enough to ‘pay’ the balance in your 5% savings account, and not touch it until the introductory rate ends.

It’s ok if you can’t do it, as long as you plan accordingly; but if you deceive yourself into taking on a commitment you can’t handle, you’re in trouble.

The best thing about common sense is that its more of a rarity than anything else. We’re all guilty of doing things that just don’t make sense. How many people out there drive nice flashy new cars but have to live with mom and dad just to pay for them? Common sense would say they should save their money and move out but the order of priorities is completely different at different stages of your life and net worth doesn’t come into the decision equation.

Moderation and thought about your actions and decisions will go a long way to not falling for the 7 net worth killers.

@ Independent George – I second that “not being honest with yourself” statement. It pretty much sums up most of the other 7 NW killers when you think about it.

The ability to step back and take a brutally honest assessment of yourself, your capabilities, and your situation, is the fundamental underpinning of success. This is, of course, not to suggest an exercise in beating yourself up. I’ve learned that that is counter-productive.

But, you have to play to your strengths, and mitigate your weaknesses. Without understanding what those strenghts and weaknesses are, you have no basis for a plan of action.